A seven-year growth streak has ended for Orange County’s largest shopping centers. The group of 35 properties, with retailers, restaurants and entertainment venues as tenants, posted $8.14 billion in sales for the 12 months ended June 30—a 0.3% year-over-year decline. The pace of growth slipped from last year’s 1.7% gain and an 8.6% increase the group notched for the 12 months that ended June 30, 2015.
More than half of the shopping centers—17—reported increases, 14 were down, and figures for the remaining four were Business Journal estimates. This week’s list data is either self-reported or obtained from respective cities.
The Rankings
• The list’s leaders include South Coast Plaza, the perennial No. 1 with $1.72 billion in taxable sales, a 0.7% uptick from a year ago. The shopping center’s owner, C.J. Segerstrom & Sons, has yet to announce its plans for the 300,000-square-foot space it acquired from department store operator Sears Holdings Corp. for $187 million, and the tenant hasn’t disclosed plans to leave the Costa Mesa location any time soon.
That hasn’t stopped others from speculating, or offering suggestions, about what could prove to be the biggest overhaul to Southern California’s top luxe mall. LAB Holdings Inc.’s Shaheen Sadeghi told the Business Journal last month he “wouldn’t put a department store in there,” but something that creates the “opportunity for a social connection.”
Bryon Ward, a partner with Newport Beach-based Burnham Ward Properties, said a project in the vein of Westfield Century City’s Eataly L.A. could prove to be a model for South Coast Plaza’s operators. The newly opened, 67,000-square-foot, all-things-Italian food outpost at the Los Angeles mall is part food hall, cooking school and market. It was forced to close for a time last week because it was too crowded, according to local reports.
Last week’s Insider column reported that south of Sears at the former Z’Tejas site, South Coast Plaza signed on the Vaca Group to develop a food hall concept to open next fall.
“Experiential” retail centers are the key to attracting shoppers, said Ward, whose firm was behind the development of Costa Mesa’s SoCo and OC Mix shopping center. The company has a similarly eclectic project under way near Long Beach Airport, called Long Beach Exchange or LBX, and was selected this month by the county to build a new food-centric retail center at Dana Point Harbor.
South Coast Plaza, meanwhile, is busy celebrating its 50th anniversary, with a host of art, fashion and cultural events.
• Fashion Island, No. 2 on the list, also turned 50 this year, albeit with less fanfare. It posted $633.4 million in taxable sales, a 2.2% dip from a year-ago period. Irvine Co., the center’s owner, replaced two members of its executive team. It hired Butch Knerr to replace Dave Moore as president of the retail properties division, whose reason for departure wasn’t disclosed. Easther Liu, the division’s chief marketing officer, has also parted ways with the developer (see story, page 4).
• The Market Place in Tustin/ Irvine—also part of Irvine Co.’s 43-propety retail portfolio—rounded out the top three spots with a 7.5% increase to $500.5 million.
• Brea Mall followed at No. 4 with $494.2 million, about the same as last year, and Irvine Spectrum Center at No. 5 with $455 million, saw a 4.3% increase.
• The District at Tustin Legacy, remained No. 6 on the list, with $363.8 million in taxable sales, a 2.6% dip. Its ownership makeup, however, changed in April with Phoenix-based Vestar Development Co. selling a portion of its stake to partner Kimco Realty Corp. in New Hyde Park, N.Y. (see story, page 1).
• Taxable sales at the Downtown Disney District in Anaheim, dipped 5.9% to $188.7 million. The open-air shopping and entertainment venue, which has 300,000 square feet of gross leasable space, plans to expand in the near future by adding a hotel that will occupy 17 acres on its west side that’s home to an AMC Theatre and Rainforest Cafe.
The center placed No. 13 on the list, but led the group in sales per square feet—about $684. No. 17, Fullerton Town Center’s sales per square feet followed at about $679. The shopping center, which has 263,578 gross leasable square feet, posted $164.7 million in revenue, a 1.5% uptick.
South Coast Plaza’s taxable sales per square feet were third-highest at $673. The figures allowed for an 8% vacancy rate, a national average.
• A longtime entry, Laguna Hills Mall, has been missing from the list since the center’s owner, Merlone Geier Partners in San Francisco, began remodeling the property in 2015. It appears the mall’s return in the near future is unlikely. The project, at an estimated $260 million, calls for turning the indoor mall into a downtown-like environment featuring new retailers, a movie theater complex, new parking structure, and a 350-unit apartment complex. It was scheduled for completion in late 2019.
Merlone Geier halted the construction after acquiring Macy’s 160,000-square-foot building there this year, and is now “shifting around portions of the site plan” to “take advantage of a new opportunity,” according to Vice President of Development Stephen Logan.
